Busy boards and corporate performance

Abstract

Purpose

The purpose of this paper is to analyze and examine the relationship between busy boards and corporate performance in China.

Design/methodology/approach

Based on a sample of non‐financial listed companies in the Chinese stock market from 2007 to 2010, by defining several measures of busy board, the paper investigates the relationship between busy boards and corporate performance in China.

Findings

The paper finds many busy boards in Chinese listed companies; compared to companies without multiple directorships, the companies with multiple directorships have better corporate performance; the number of multiple directorships in boards should maintain a certain ratio, or the busy boards will be harmful to the corporate performance.

Originality/value

This is the first paper to analyze and examine the impacts of busy boards on firm performance in China directly. The findings are also useful to regulation of limiting the numbers of independent directors seated on other boards.

Citation

Lu, X., Wang, J. and Dong, D. (2013), "Busy boards and corporate performance", China Finance Review International, Vol. 3 No. 2, pp. 203-219. https://doi.org/10.1108/20441391311330618